Outlook and challenges for Finland´s public finances

The government term is at its halfway point so this is a good time to examine the development of public finances and the labour markets in relation to the targets set for them. This report evaluates the situation in public finances and the labour market, and finds that the government is falling short of some of its key targets. Although there has been some positive economic news during the past few months, the problems in public finances and the labour market have not disappeared.

On the basis of this review we can state that the scale of the government programme and the planned timing of actions to be taken still seem to be correct. However, not all actions have been executed to the extent intended or their impact has been delayed.

It seems that the measures already taken in respect of employment and growth are not sufficient to strengthen public finances by the EUR 2 billion that was set as the target in the government programme. Achieving the employment targets is unlikely without effective policy measures that would strengthen the demand and supply of labour.

Savings of EUR 1 billion by eliminating tasks and obligations of public finances have not yet been reached even in half. In order to achieve the targeted savings, a significant number of decisions that will definitely result in further savings are needed.

The government could achieve its key targets by determined implementation of the actions contained in the government programme or by implementing alternative measures to strengthen public finances and increase employment rate. Measures to strengthen public finances should be focussed primarily on central government finances because the central government is not expected to meet the deficit target. This would also support meeting EU obligations.